Posted
by
timothy
on Wednesday January 06, 2010 @04:29PM
from the hey-cut-that-crap-out dept.

hollywoodb writes "The first carbon tax to reduce the greenhouse gases from imports comes not between two nations, but between two states. Minnesota has passed a measure to stop carbon at its border with North Dakota. To encourage the switch to clean, renewable energy, Minnesota plans to add a carbon fee of between $4 and $34 per ton of carbon dioxide emissions to the cost of coal-fired electricity, to begin in 2012 ... Minnesota has been generally pushing for cleaner power within its borders, but the utility companies that operate in MN have, over the past decades, sited a lot of coal power plants on the relatively cheap and open land of North Dakota, which is preparing a legal battle against Minnesota over the tariff."

Minnesota's attempt to do this dates back nearly 20 years, long before the current global-warming political debate, so interesting to see it finally passing. I believe the first bill was proposed in 1992, which would've imposed a $6 per ton tax; here's a 1994 report [ilsr.org] by a MN environmental group as well. Major attempts seemed to happen every 3-5 years.

It's not nearly that clear in this case. The tax is only applied to companies doing business in Minnesota, and is only assessed on the portion of their business considered to impact Minnesota (i.e. emissions actually generated in Minnesota, emissions imputed to electricity transmitted in Minnesota, etc.). It's at least arguable that that doesn't violate the dormant commerce clause: MN isn't specifically taxing only imports and exempting in-state MN electricity generators, which is the usual inter/intra-state disparity in treatment that caused constitutional problems; nor is the state attempting to tax companies that don't do business in MN.

Those are all certainly good points but it's not nearly cut and dried unconstitutional as people are making it out to be. For example, I believe states can rightfully burden interstate commerce in the name of health and safety. Take an example from 1890 [justia.com] where states had different laws on the quality and inspection of meat that could be sold within their borders for human consumption. In the name of public safety, Minnesota was allowed to burden interstate commerce on foods not inspected within its borders after someone distributed rank meat acquired from Illinois and not certified by a Minnesota inspector.

Now, this requires Minnesota to prove that the coal generated electricity is a threat to health and or safety of its citizens. That's going to be hard to do. But as your other post pointed out [slashdot.org], they've been going about this for quite sometime but I'm sure every year they feel closer to being able to prove this is legal on account of public safety.

Everything is defined as interstate commerce now, at least when the Feds want it to be. Allow me to cite two Supreme Court cases:

Gonzales v. Raich [wikipedia.org] - A woman in California grew medical marijuana (legal in CA) and gave it away for free, solely within California. This was defined as interstate commerce in the decision.

US v. Stewart [wikipedia.org] - Stewart personally designed and built his own homebrew machine guns, not for sale. After he was busted by the feds, he lost the case but won on appeal. The government appealed the case to the Supreme Court. It was remanded by the Supreme Court back to the appellate court for reconsideration "in light of" Raich. This means that the Supreme Court considers Stewart's actions to be interstate commerce too.

In conclusion, "interstate commerce" is now de facto defined as "anything the Federal government wants to regulate, even if there is no commercial or interstate aspect". Naturally, I imagine that this flexible definition is reserved for the Feds use only--no doubt states will have to continue to use the actual definition (ie. what the Constitution actually means).

Naturally, I imagine that this flexible definition is reserved for the Feds use only--no doubt states will have to continue to use the actual definition (ie. what the Constitution actually means).

As far as "what the Constitution actually means", it's not clear that there is actually a blanket ban on states regulating interstate commerce--- there is textually no such ban. It's been inferred from the commerce clause to form the so-called dormant commerce clause [wikipedia.org]. But yes, under existing precedent the dormant c

Basically you can grow wheat, grind it up into meal, and then feed it to your chickens. All of this can happen and it never leaves your farm but it's still interstate commerce. (Don't ask me how this can possibly make sense since there's nothing being sold and nothing being transported between states.) I'm thinking the 2 you found probably referenced this one.
http://en.wikipedia.org/wiki/Wickard_v._Filburn [wikipedia.org]

Is it just me, or did the government claim in Raich that consuming your own marijuana affects the interstate marijuana trade and that causes your marijuana or personal consumption to become interstate commerce? Is the government really trying to say that if I use marijuana I grow myself that I am hurting people who are importing marijuana? I know I must have read that wrong.

Nope, you read it right. It's the court that is wrong, and absurdly so. I recommend a read of Justice Thomas' dissenting opinion--it's pretty scathing and spot-on.

Isn't that equivalent? It's more or less a sales tax on electricity, pro-rated by how much carbon was used to generated the electricity. They could collect the sales tax from the purchaser, or from the seller; usually sales taxes are collected from sellers, because it's easier to administer such a system.

Not having a "tax" on environmental damage causes everyone who is effected by damage to the environment to subsidize industry that damages the environment.

While it is hard to put a monetary value on environmental damage, its obviously not $0. If an industry is making money damaging the environment, that may be fine, but some of the money really should go to everyone living in the damaged environment.

Its also nice to see individual states take the lead in issues like this.

Its also nice to see individual states take the lead in issues like this.

Yes, it is nice to see individual states taking a lead in dramatically raising energy costs, especially in a recession. It only further proves how utterly incompetent our leaders. While taking energy is stupid in the first place, even if a country or state is dead set on doing it, only a moron would do it DURING A RECESSION when people don't have the money to pay the tax. Taxing energy raises all costs - do you really thing the people of Minnesota can afford to pay more for heat, fuel for cars, food, lig

Incompetent? No, I think they know exactly what they're doing: Some bureaucrats smell a cash opportunity, and want to milk it. This is *especially* important during a recession, as they need to also justify their payrolls - now they can look like they're "doing something" while raising the cash to keep paying their salaries, whilst otherwise voters would send them to the streets.

Basically the economic climate naturally increases the pressure for smaller government, while those politicians who know they aren

There is no good time to tax energy, because it's a stupid thing to do. All I said was that if you're going to insist on doing something economically damning, don't do it during the second worst economy in the history of the country.

But if we don't start doing it soon, when that source runs out, we won't have the technology or the infrastructure to replace it.

When we actually are in danger of running out, people will start to change over. Why? Well first, because there will be people wanting to make money by being one of the major non-fossil fuel energy sources. Secondly, there will be the natural self-preservation instinct. Thir

All taxes effectively raise prices, either directly (making things more expensive) or indirectly (reducing the amount of income you have to spend on them). Sane tax policy is picking taxes that do the least harm to the economy.

First, I never argued against taxes, I argued against taxing energy. Secondly, taxing energy makes EVERYTHING cost more. At every step of production, transportation, and sales, prices go up. It is the worst kind of tax because EVERYTHING relies on energy at some point in the production / sales chain. Even a book requires energy to get the lumber, transport the lumber, turn the lumber into paper, get the paper to the printing facility, run the printing facility, print the book, transport the book to the

This will, of course, ultimately be passed on to the customers. Ultimately, this is a way to raise taxes to force a change in private industry. The government keeps the money, and we the people pay the taxes. It won't hurt the companies in this case because there is no choice in electricity providers. You can't switch electric companies like you can cell phone companies.
How, exactly, will this force "cleaner" electricity generation?
What will be done with the money from these tariffs? Will it only be used for environmental concerns, or will it just go into the general budget?

This will, of course, ultimately be passed on to the customers. Ultimately, this is a way to raise taxes to force a change in private industry. The government keeps the money, and we the people pay the taxes. It won't hurt the companies in this case because there is no choice in electricity providers. You can't switch electric companies like you can cell phone companies.
How, exactly, will this force "cleaner" electricity generation?
What will be done with the money from these tariffs? Will it only be used for environmental concerns, or will it just go into the general budget?

implementing a plan to Americanize our energy sources by generating 25% of the state's electricity from renewable sources by 2025

As a moderate Democrat, I was kind of afraid when he almost got a bid in 2008... because he's actually not that bad of a candidate. He doesn't talk like a moron and he's got his head in a lot of the right places. If he would cut the Christian God talk out of his speeches, I'd probably be on board. Sorry to get offtopic but I'm trying to say that this tariff would probably be a huge in road for him to moderates if he could pull it off. I'm certain he's not the prime motivator behind this but I would bet that they'd take the taxes from this and dump it into wind incentives. They're racing against Iowa in the wind department. California and Texas are too big and too prime locations to take on for Megawatt generation from wind power.

That is where I bet they would take this money: incentives to corporations for wind power.

It makes cleaner electricity generators more competitive because, as you point out, it raises the price of their competitors' product (electricity from coal-fired generators). A tax on a competitor is basically an indirect subsidy.

Energy has been deregulated for some time now. The owners of the power lines are forced to lease them to anyone. I live in Georgia and have the option of 3 different companies.

This law will encourage people to use power more efficiently. In addition it helps remove the subsidy that Coal powered electricity has enjoyed for most of the last century. (And yes it is subsidized through legal protections and by not having to clean up much of its environmental d

That way the local public utility infrastructure can be regulated by one set of rules, and the electricity providers by a different set. Makes sense to me. Now if we could only have the same separation of infrastructure and content with the cable companies...

I can choose variable rates or fix my electricity rate for up to 24 months. I can also choose electricity solely from renewable sources (it's usually a fraction of a cent per kilowatt-hour more, compared to non-renewable sources from the same provider).

Rather than imposing a tax on producers, Minnesota legislators should consider giving consumers th

Easy. Just like you said, the cost of the tax will be passed on to customers. As taxed carbon-based energy grows more expensive, consumers will turn to cleaner forms of energy that will be relatively cheaper, and companies will increase its production to meet the increased demand for cleaner energy.

Also, there may be no choice between electricity providers, but providers can offer a choice between clean and dirty energy. Portland General Electric does this. It costs slightly more but PGE guarant

At the risk of getting flamed and shot down, I have to admit that I actually favor actions like this. Will it hold up in a legal sense? Like the Queen's ass, that remains to be seen. However, I have long though that those things which are blatantly harmful to human beings, and the planet in general, should have enough economic disincentives as to make them all but beyond the ability of anyone to procure. Oh, I think you should be free to buy whatever you wish, but I think that freedom should include the freedom to have to spend all of your money on the stupid, inefficient, and harmful things if you so desire them. I'm frankly tired of seeing the economic incentives of "cheap" and "profitable" driving harmful things. It's time the tables turned, in my opinion.

However, I have long though that those things which are blatantly harmful to human beings, and the planet in general, should have enough economic disincentives as to make them all but beyond the ability of anyone to procure.

How about the things such as coal burning plants which aren't "blatantly harmful" to human beings? I recognize there is some pollution issues with coal burning. It produces small amounts of sulfur dioxides, nitrates, and even introduces more radiation than nuclear plants. They also provide electricity to people and businesses. Benefits outweigh the minor harm.

Let me say, my post is actually more about efficiency versus inefficiency. Generating your power outside of your state and pushing it across inefficient lines (where the majority of our generated electricity is lost) is horribly inefficient. Inefficient use of finite resources IS blatantly harmful, to anyone involved. Furthermore, I was at one time, a Geology major, so I have never really bought into AGW. I'm not really arguing it from that standpoint.

We're not going to run out of iron. Ever. And the steel in a car is a tiny fraction of the environmental impact of the car over it's lifetime, so it's not like re-using enough wire hangers to equal the weight of steel in a car offsets the vehicle.

If you're going to look at the environmental impact of dry-cleaning, the washing process itself and the car trip to deliver a few shirts and the employees of the store dwarf a few coat-hangers. And the form the better part of the expenses of the company, and are

I'm frankly tired of seeing things which are not harmful being labeled as "harmful".

Well, since toxicity is related to dosage rather than substance, one could argue that everything is harmful, and should be regulated, taxed, and carry a warning label, which is where a lot of the alarmists would like to take us.

That being said, coal-fired power plants suck ass is a major way, and fuck up the environment for lots of people who bear none of the benefits of that plant. The water here in the northeast has been plagued for decades by acid rain produced by power plants in the midwest. The lo

should have enough economic disincentives as to make them all but beyond the ability of anyone to procure

I prefer to think of it as balancing the books. If you actions are responsible for pumping x amount of pollution into the atmosphere then you should be responsible for cleaning it up. This cleaning up can happen in various ways, in the example of using electricity from coal fired power stations and only considering the CO2 pollution:. The electricity company plants some trees or otherwise sucks the pollution out of the air, and charges you an increased rate for doing so. The electricity company pays a third

So long as those trees you plant aren't close enough to that coal plant to be effected by the acid rain (coal being made of carbon, hydrogen, oxygen, nitrogen, and sulfur, the byproducts of which will form carbonic and sulfuric acid in rain), and if they are far enough away to escape exposure to the mercury, uranium, thorium, and arsenic that are also byproducts of coal emissions. If so, that plan works wonderfully.

It doesn't even have to be about AGW. Go look at your average coal mining site. Go look at your average coal plant. There's a lot of crap that gets spewed out, and that crap can't be good for the environment or for you and I. There should be disincentive to doing those things, as the people who reap the benefits of causing pollution often aren't the ones who have to live with it, or pay the costs of it.

This is, of course, predicated on you believing AGW. Which appears to be up for debate. Significantly.

Only if you're a conservative American. Curiously enough that's about the same demographic that still believes the earth is 6000 years old.

Seriously, guys. You were all saying that GW didn't exist a few years ago. Now it exists but isn't manmade. In 10 years you'll be saying that it exists, is manmade, but we can't do anything about it. Do you ever have a thought glennn beck doesn't think first?

Back during the Cold War, a lot of the nuclear missile silos were located in the Midwest, specifically the Dakotas and Montana. Growing up in SD, I would hear stories from teachers about practicing for fallout drills, because should such an attack come from those heartless bastard Commies, we would be one of the initial targets. Anyways, what you're referring to was the thought that should South Dakota, North Dakota and Montana secede from the nation and form their own, it would be one of the top 5 nuclear

This will not likely reduce carbon, what will likely happen is coal plants in other states to will increase capacity while the ones in Minnesota will likely shut down.
This is the same thing that is happening with the US and China. Companies in the US can't afford to meet all the environmental regulations, so they move to China, and continue to pollute. The end result is the same amount of pollution, and increased unemployment in the state/city/country with the strict regulations.

Except that Minnesota's tax is on electricity generated by coal plants anywhere, which is the source of the whole North Dakota thing. North Dakota has a huge electrical generating capacity, most of it from North Dakota coal with increasing portions from wind farms in various parts of the state, and exports a lot of that electrical power to Minnesota. Minnesota is doing nothing but increasing the price of electricity for its people.

You miss the point. They're increasing the price of electricity as currently provided in order to create incentives to provide alternate forms of electricity generation.

Coal is dirty and cheap. As long as it stays cheap, there is little incentive to use more expensive alternate sources. If they make coal artificially expensive, it becomes economically feasible to invest in alternate sources. Once they're commoditized, the alternate sources may become cheaper, bringing the price of electricity back down.

... has such a surplus that it can afford to introduce yet another incentive to leave.

Why do governments so often fail to consider the effects of disincentives? For example, when raising taxes, they calculate expected increases in revenue while underestimating changes in the behavior of the taxed. They always act surprised when the expected additional revenues don't materialize, or indeed revenues fall.

Perhaps it has something to do with most elected officials being lawyers and not businessmen, engineers, etc.

Interestingly enough, North Dakota is one of the few state governments that has a surplus right now. A huge one. With the lowest unemployment rate (4.1%, low in any economy). Guess which industry can rightly take a lot of the credit for making that possible.

Why do governments so often fail to consider the effects of disincentives?

Huh? That's exactly what this is all about. They're trying to get people to stop using coal. They're not failing to consider the disincentives, the whole point of this tax is to create a disincentive. If everyone stops using coal and they end up generating no revenue at all with this tax, they will consider the tax to have been wildly successful.

Sweden, Finland, Denmark, Norway and The Netherlands introduced a Carbon tax in 1990-1991. France and Ireland have just introduced their own and it appears that even in the US this isn't a first as Boulder Colorado (2006) and the "Bay Area Air Quality Management District" (2008) had already introduced Carbon Taxes.

Given the prevailing Westerlies, most of that pollution from those Dakotan coal plants gets pushed over Minnesota, delivering acid-rain and whatever else to Minnesotans. Yet because these electricity producers have government-given guarantees that they need take no responsibility for such damages, Minnesotans (and others further away) have to suffer the consequences without recompense.

Minnesota has passed a measure to stop carbon at its border with North Dakota. Wonderful! So Minnesota has deployed a large-scale working version of Maxwell's daemon, then? Or perhaps they've merely come up with a scheme to make generating power with coal in ND and then selling to MN less cost effective (which admittedly is perverting the free market to achieve a common good).

What we need is action now. Action like massive taxes on the construction of fossil fuel-powered power plants, so that the CO2 absorbtion systems (i.e. trees) can be ready at approximately the same time as new emissions start, and alternatives can be financed before new power plant starts emitting.

It's kind of funny the Scientific American article says "that this would unfairly discourage coal-powered electricity sales in favor of renewably powered electricity". I'd hardly call this unfair. More poignantly, I'd say that's the purpose of the bill, and if North Dakota is suing my state, it's because the bill will work.

Yes, this may marginally increase the cost of manufacturing some kinds of goods but the overall impact will largely affect th

Interstate trade is regulated by Congress, according to the constitution. Courts have held that all taxes on trade between states are an unconstitutional restraint on trade. The only exception is alcohol, which is granted an exception by the 21st amendment.

This isn''t a tax on trade between states. It's a tax on carbon. It's perfectly neutral in theory -- no matter where your carbon-based energy comes from, it gets hit with the tax. Now, it's true that much of MN's coal-based energy comes from ND, so the law will impact imported power more than local power, but a luxury tax on high-priced wines is not unconstitutional because more wine is grown in California and imported to Minnesota rather than grown in Minnesota. This is no different. There's nothing unconsitutional going on here, it's a spurious argument being raised by people who oppose a carbon tax in principle.

The tax is a Tariff, which by definition, is a tax on imports. Minnesota can tax consumers directly for the carbon they use if they so choose, but they may not tax imports of coal into their state. They can tax the use of coal by utilities in their state, but not the importation of coal into their state. If indeed this is a tax on imports of anything (except alcoholic beverages) from North Dakota, then the courts would strike that down in a preliminary hearing.

This has nothing to do with your political leanings; it's pure constitutional law as I (I'm not a lawyer) understand it.

This isn''t a tax on trade between states. It's a tax on carbon. It's perfectly neutral in theory -- no matter where your carbon-based energy comes from, it gets hit with the tax. Now, it's true that much of MN's coal-based energy comes from ND, so the law will impact imported power more than local power, but a luxury tax on high-priced wines is not unconstitutional because more wine is grown in California and imported to Minnesota rather than grown in Minnesota. This is no different. There's nothing unconsitutional going on here, it's a spurious argument being raised by people who oppose a carbon tax in principle.

Except that this isn't a tax on carbon, it is a tax on electricity based on how that electricity is generated. If that electricity is not generated in Minnesota, Minnesota is not constitutionally allowed to regulate how it is generated. Electricity generated using coal is indistinguishable from electricity generated by any other means.
Minnesota cannot legally tax carbon that is released in another state.

Which raises another interesting point: Since when has business been able to violate our free speech rights? Why should *ANYBODY* be blocked from receiving scholarly material on the Commerce Clause by an inability to pay?

That may be commonly understood by laymen but there must be some wiggle room. How else do you explain the widely varying taxation rate on tobacco sales? Some states have very small tax, like Missouri with their $.17 per pack tax, or Rhode Island with their $3.46 per pack tax.

There are multiple interpretations of the Interstate Commerce Clause. By some interpretations, States do have limited rights to regulate commerce with other states. Also, there seem to be additional interpretations of the law for state-owned services (See the paragraph on "In United Haulers Assoc. v Oneida-Herkimer Solid Waste Management Authority (2007)".

Interstate trade is regulated by Congress, according to the constitution. Courts have held that all taxes on trade between states are an unconstitutional restraint on trade. The only exception is alcohol, which is granted an exception by the 21st amendment.

You do realize that some states have a usage tax on items purchased in other states. So if you purchase something from Amazon, depending on your state, you need to pay the usage tax on those goods.

Only the federal government has the authority to regulate interstate and foreign commerce. States can't levy tariffs on each other's goods because they were not given the constitutional authority to do so.

Except that they presumably are not applying those same taxes to their own state residents. In other words, they have constructed an elaborate system that results in a tax paid only by folks from out-of-state. That is clearly unconstitutional.

Personally, this is my most hated part of the Constitution- it prevents economic experimentation and competition between the States.

I take it that you haven't read any early American history.

The tariff wars between New York and New Jersey were legendary, and were an explicit reason for this clause being put into the Constitution in the first place. For the few brief years after the Battle of Yorktown and before the U.S. Constitution was ratified, New York and New Jersey engaged in a trade war the likes of which have only been seen between England and France... perhaps even worse. Much of this centered on Manhattan and New York City, where goods in transit across the Hudson River were heavily regulated and there were bands of pirates/smugglers and other kinds of incredible headaches for all involved. Taxes of over 100% and even up to 1000% on some goods were imposed just to cross the Hudson River. It nearly started an all out war between those two states, where both armies and navies were being assembled for just that very purpose, and some shots were exchanged between uniformed military forces of both states.

There is a good reason why this clause was put into the Constitution in the first place, and a damn good reason why it should be respected and not tampered with for even a well meaning cause like "global warming".

If people don't want to see carbon taxed, they can point out that most of the coal-fired energy used in Minnesota actually comes from North Dakota, and then pretend that this is a case of an interstate tariff when it's nothing of the sort.

Except that it is a case of an interstate tariff. My prediction is that it will be overturned by the courts.

Except that it is a case of an interstate tariff. My prediction is that it will be overturned by the courts.

I'm sure it won't be, precisely because it's not an interstate tariff, no matter how badly the Dakotas wish it was. The motives may be ultimately the same as a protectionist tariff, but the action itself is perfectly normal case of taxation. You can't overturn a cheese tax just because a lot of cheese gets imported from Wisconsin, you can't overturn a wine tax just because a lot of wine comes from California, and they won't overturn a carbon-tax just because a lot of coal-generated electricity comes from

Hello....the price of coal-based power will go up, making it more economically feasible to produce power in a cleaner way. Once enough of that happens, the price goes back down due to economies of scale and commoditization.